Recent Posts

Top 5 Ways to Reduce Risks in Stock Market Investing


blue-chip-company


As scary as it may seem, there are significant risks in the stock market. This should never scare you though. You don't need to be an expert. There are 5 ways that you can do to ensure a fail-proof investment in the stock market. These top 5 ways can significantly reduce the risks in your nest eggs.


Blue-Chip Companies

Only invest in “blue chip” companies. These are companies which are in good standing in terms of profitability, years in existence and credibility.

These are companies which you expect to be still operating after 10 years. So how do you assess if it’s a Blue Chip Company?

Simple. Google the company and visit their site. See their financial reports and company profile. There you can assess if the company is growing or not, losing or profiting from its operations.

Or you can check it yourself with the brand and company itself. The more you see them on media, advertisements, engagements, etc., the more likely it is to be good.


Diversification

As the old cliché goes, “Don’t put all your eggs in one basket.” Why? Cause if the fox steals it, there’d be none left. Poor you! In stock market, learn to invest in every industry.

As a rule of thumb, you should have stocks in financial, conglomerates, oil & mining, food, real estate and retail. The reason behind this is to normalize your loss whenever one industry is down.


BUY BUY BUY!

No matter what the scenario is, you should continue buying stocks and not sell it unless you need emergency funds. When you buy stocks for a longer duration of time, you are building an empire little by little and that is rewarding in the end seeing the results!

Cost-averaging Method

Invest small, frequent amount. In this manner risk is evenly distributed per period and not in lump sum. The idea behind this is that, if you continuously buy stocks, the future market price is still way higher than the average price of the stocks.

Example, say you buy Apple stocks today for $750/share. Next year you buy it at $740. Next at $762. Then at $780. The market price is at $780/share. If you take the average price of your stocks (i.e. 750+740+762+780), that would yield an average of $758!!!

Meaning, for 4 years, you bought Apple stocks at an amazing price of $758! Since the present market price is $780, you are gaining $22/share ($780-$758)! How’s that? Imagine if you have a thousand shares of Apple stocks in four years. That would translate to $22,000 ($22/share x 1,000 shares) profit!!!

Glance in a While

While you can leave your stocks running, perhaps it is better and wise to monitor it just once a week and see the market. You can’t afford to lose simply because of overconfidence or lack of supervision.

You might not even know that your stocks are falling so it’s best to take an action before it gets worse. Now you know these important investing methods. It is now your part to share this to others and spread the message.

It is my goal to offer free financial inputs to everyone. Share this to your friends via Facebook or email. Thanks for visiting!

3 comments:

  1. Investing is like driving a supercar. Yes it's pretty damn fast! But you can drive it slow :)

    ReplyDelete
    Replies
    1. and drive smart by enjoying the journey instead of finding a shortcut. ^^

      Delete
    2. Agree, tradersnotes.. stock market investing takes patience to build your portfolio. Either you want to get profit quick (and lose) or invest in the long haul and be profitable

      Delete

Powered by Blogger.